Question

Three weeks ago John bought stock at 491/4; today the stock is valued at 497/8. We could say the stock is performing at which of the following? A. Below par B. Above par C. Par equality D. On par

Answer 1

Answer:

A. Below par.

Step-by-step explanation:

We have been given that 3 weeks ago John bought stock at 491/4; today the stock is valued at 497/8.

Let us find change in stock's value by subtracting present value from the value of stock 3 weeks ago.

$\text{Change in stock's value}=\frac{497}{8}-\frac{491}{4}$

Let us have a common denominator.

$\text{Change in stock's value}=\frac{497}{8}-\frac{491\times 2}{4\times 2}$

$\text{Change in stock's value}=\frac{497}{8}-\frac{982}{8}$

$\text{Change in stock's value}=\frac{497-982}{8}$

$\text{Change in stock's value}=\frac{-485}{8}$

We can see that stock's value has decreased, therefore, the stock is performing below par and option A is the correct choice.

Answer 2

The correct answer on my test was Above Par